We define fiscal sustainability as lowering the ratio of the federal debt held by the public to the gross domestic product in 2041 from a projected 126% to 75%, roughly where it is today. Although there is no consensus on just how much debt is “sustainable,” experts are generally in agreement that the current trajectory of ever-rising debt is economically risky. To be sure, some economists and some politicians argue that reducing the debt/GDP ratio to 75% over the next 25 years is not enough.

4. Summary and Conclusions As Lerner (1947) recognized in an essay entitled Money as a Creature of the State, there is an important link between sovereignty over money and sovereignty over policy. Governments that control their own currencies can coordinate their fiscal and monetary operations and prevent financial markets from dictating the terms of finance. They can spend first and borrow later, as Bell (2000) and Fullwiler (2006) have shown. They can “afford” anything that is for sale in the domestic unit of account. They can sustain the debt at any level. They can restore growth and eliminate economic insecurity, implementing their policies in accordance with the principles of Functional Finance.

As the US is a sovereign currency issuer (the reserve currency to boot) it can sustain any debt level. In fact, government debt equals the savings of the private and foreign sector. Thus, saying we have too much debt implies we also have too much savings! (see here: https://en.wikipedia.org/wiki/Sectoral_balances )

The real constraints the government has to observe in its spending policies are the rates of unemployment and inflation. It wants to adjust its deficit spending to achieve full employment and stable prices. As long as we have unemployed workers we CAN afford it.